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INTERIM REPO

RT 2019 中期報告

2019中期報告

股份代號 : 00119 Stock Code: 00119

2019INTERIMREPORT

2 Corporate Information3 Management Discussion and Analysis14 Interim Results14 Condensed Consolidated Statement of Profit or

Loss15 Condensed Consolidated Statement of

Comprehensive Income16 Condensed Consolidated Statement of Financial

Position19 Condensed Consolidated Statement of Changes

in Equity20 Condensed Consolidated Statement of Cash

Flows21 Notes to the Condensed Consolidated Financial

Statements42 Other Information

Contents

POLY PROPERTY GROUP CO. , LIMITED INTERIM REPORT 2019

2

CORPORATE INFORMATION

BOARD OF DIRECTORSExecutive DirectorsZHANG Bingnan (Chairman)HAN Qingtao (Vice-Chairman)XUE MingWANG XuWANG Jian (Managing Director)YE LiwenZHU Weirong

Independent Non-executive DirectorsIP Chun Chung, RobertCHOY Shu KwanLEUNG Sau Fan, SylviaWONG Ka Lun

AUDIT COMMITTEELEUNG Sau Fan, Sylvia (Chairlady)IP Chun Chung, RobertCHOY Shu KwanWONG Ka Lun

REMUNERATION COMMITTEEWONG Ka Lun (Chairman)IP Chun Chung, RobertCHOY Shu KwanLEUNG Sau Fan, Sylvia

RISK MANAGEMENT COMMITTEECHOY Shu Kwan (Chairman)IP Chun Chung, RobertLEUNG Sau Fan, SylviaWONG Ka LunWANG JianYE Liwen

COMPANY SECRETARY AND AUTHORIZED REPRESENTATIVEWONG Cheuk Him

LEGAL ADVISERMorrison & Foerster

AUDITORBDO Limited

PRINCIPAL BANKERSAgricultural Bank of China LimitedBank of China LimitedChina CITIC Bank International LimitedChina Construction Bank CorporationChina Construction Bank (Asia) Corporation LimitedChina Everbright Bank Co., Ltd.Chong Hing Bank LimitedCMB Wing Lung Bank LimitedHang Seng Bank LimitedIndustrial Bank Co., Ltd.Industrial and Commercial Bank of China LimitedIndustrial and Commercial Bank of China (Asia) LimitedThe Bank of East Asia, Limited

INVESTOR RELATIONS CONSULTANTWonderful Sky Financial Group

SHARE REGISTRAR AND TRANSFER OFFICEComputershare Hong Kong Investor Services LimitedShops 1712–171617th Floor, Hopewell Centre183 Queen’s Road East, Hong Kong

REGISTERED OFFICERoom 2503, Admiralty Centre, Tower 118 Harcourt Road, Hong Kong

COMPANY WEBSITEwww.polyhongkong.com


3

MANAGEMENT DISCUSSION AND ANALYSIS

For the first half of 2019, Poly Property Group Co., Limited (the “Company”) and its subsidiaries (the “Group”) recorded a revenue of HK$17,494 million (corresponding period of 2018: HK$6,992 million), representing an increase of HK$10,502 million or 150% when comparing with the corresponding period of last year. Profit attributable to shareholders amounted to HK$3,738 million (corresponding period of 2018: HK$621 million), indicating an increase of HK$3,117 million or 502% from the corresponding period of last year. Basic and diluted earnings per share stood at HK102.08 cents and HK101.65 cents, respectively (corresponding period of 2018: HK16.95 cents).

As at 30 June 2019, shareholders’ equity amounted to HK$32.956 billion (31 December 2018: HK$29.889 billion), indicating a 10.3% increase from last year end. Net asset value per share amounted to HK$9.00 (31 December 2018: HK$8.16), representing an increase of 10.3% when comparing with last year end.

BUSINESS REVIEWIn the first half of 2019, the overall economy of China remained stable despite complicated and severe domestic and global situation. The real estate market entered the adjustment period again. According to the National Bureau of Statistics, the growth of the sales of commodity properties, the investment in real estate development and the selling price of both newly constructed residential buildings and second-hand residential properties has slowed down. Adhering to the policy of “no speculation of residential properties” (房住不炒) and aiming at stabilising land price, housing price and market expectations, local governments took their primary responsibilities to promote a sound and stable growth of the real estate market.

In the first half of 2019, the Group, together with its joint ventures and associated companies (“Poly Property Group”) recorded contracted sales of approximately RMB19.9 billion and sales collection of RMB20.2 billion. The average selling prices of contracted sales of Chinese mainland market recorded a year-on-year increase of 2%. The Group has scheduled to launch about 60% of saleable resources in the second half of the year and has confidence that the annual sales target of RMB42 billion will be achieved. With the successful delivery and recognition of Kai Tak Vibe Centro project in Hong Kong, the revenue and profit for the first half of the year recorded a significant growth.

During the period, the Group acquired four new property projects, which are located in Shenzhen, Suzhou, Hong Kong and Foshan respectively. The Group prioritised the residential products in first-tier and second-tier cities with higher turnover rate. The land reserves of the Group further concentrated on developed city clusters such as Yangtze River Delta and Greater Bay Area, etc. Other than closely monitoring the bidding, auction and listing market, the Group will also strive to explore the business opportunities through acquisition and mergers, urban renewal, primary and secondary co-development and strategic cooperation, to achieve controlled cost and active expansion simultaneously.


4


Recently, the real estate financing gradually tightened as the market mortgage rates rebounded and the trust business supervision became stricter. The Group seized the window period and successfully issued the second tranche of asset-backed securities under the asset-backed securities programme. The comprehensive coupon rate of such securities hit the lowest level of similar products in the past three years. The Group will continue to optimise its debt structure by broadening financing channels and replacing existing debts to control its net gearing ratio and borrowing costs at a reasonable level.

The meeting of the Political Bureau of the Central Committee emphasised the great importance of economic measures to be taken in the second half of the year. Strict and effective fiscal policies would be introduced to reduce tax and surcharge while moderate monetary policies would be implemented to maintain reasonable and sufficient liquidity. The meeting reiterated the policy of “no speculation of residential properties” together with implementation of the long-term mechanism. The meeting stated that property would not be used to stimulate short-term economic growth.

The real estate market in China is expected to remain steady in the second half of the year. The Group will pay close attention to policies and market development of each operating area, strive to promote sales and cash collection, and accurately grasp the expansion opportunities. Meanwhile, the Group will improve the project development efficiency, cost management and information level comprehensively through strengthening the construction of corporate systems. The Group will refine the remuneration mechanism and talent team, establish risk and compliance awareness, and build a modernised and market-oriented enterprise, to create sustained and ideal returns for its shareholders.

PROPERTY SALESIn the first half of 2019, Poly Property Group recorded contracted area sold of approximately 1,133,000 square metres, or approximately RMB19.9 billion in value, achieving 47% of its annual sales target of RMB42.0 billion.

During the period, Poly Property Group had 79 major projects for sale, with four of them being debut projects, including Mudanjiang Poly Landscape, Ningbo Oriental Imprint, Shanghai Xijiao Jinmao Palace and Zibo Poly City. Projects with contracted sales of over RMB1 billion included Shanghai Xijiao Jinmao Palace, Ningbo Prosperous Reflection and Wuhan Poly Up Town.


5


During the period, the contracted sales of Poly Property Group by region were as follows:

Region and City

Contracted Salesfor the First Half

of 2019 Percentage(RMB million) (%)

Yangtze River Delta Region 7,763 39%Shanghai 3,403Suzhou 943Ningbo 2,847Deqing 27Yuyao 542Pearl River Delta Region 2,280 12%Guangzhou 1,306Foshan 683Shenzhen 42Huizhou 249Southwestern Region 2,856 14%Guiyang 886Zunyi 342Nanning 1,538Liuzhou 13Kunming 77Other Regions 6,547 33%Wuhan 2,686Harbin 776Mudanjiang 485Jinan 1,075Yantai 20Weihai 634Zibo 485Weifang 374Wanning 12Hong Kong, Macau and Overseas 428 2%Hong Kong 428

Total 19,874 100%

Notes:

1. Contracted sales include car parking sales;

2. Since figures were rounded up, their grand total or sub-total may not equal to the actual sum.


6


In the second half of 2019, Poly Property Group plans to launch eight new projects which include Deqing Fu Xi Project, Foshan Chan Cheng Project, Harbin Qun Li 034 Project, Jinan Huai Yin Project, Jinan Hai Zi Wa Project, Suzhou Shi Shan Project, Shanghai Jiading Affordable Housing Project and Shanghai Shan Jin Poly Plaza, depending on construction progress and market conditions.

NEWLY COMMENCED CONSTRUCTIONIn the first half of 2019, Poly Property Group commenced construction on a total of 17 new projects with a gross floor area of approximately 2,183,000 square metres. Among which, five projects commenced construction for the first time, namely, Suzhou Shi Shan Project, Deqing Fu Xi Project, Harbin Qun Li 022 Project, Harbin Qun Li 034 Project and Jinan Huai Yin Project.

As at 30 June 2019, Poly Property Group held 48 projects under construction, with a gross floor area of approximately 10,441,000 square metres.

Project

Gross Floor Areaof Newly

CommencedConstruction

Interests Attributable to

the Group(’000 square metres) (%)

Suzhou Shi Shan Project 81 100%Deqing Fu Xi Project 85 100%Guiyang Poly Park 2010 18 100%Guiyang Poly Phoenix Bay 56 51%Zunyi Poly Metropolis of Future 240 35%Nanning Poly Town Phase II 518 100%Wuhan Poly Up Town 103 100%Harbin Poly The Water’s Fragrant Dike 13 58%Harbin Qun Li 022 Project 148 100%Harbin Qun Li 034 Project 147 100%Jinan Hai Zi Wa Project 70 60%Jinan Da Shi Zi Yuan Project 57 51%Jinan Zhong Lu Mansion 123 33%Jinan Huai Yin Project 198 75%Weihai Caixin Poly Masterpiece 107 30%Zibo Poly City 191 65%Weifang Zoina Poly Mansion 27 30%

Total 2,183

Note:

1. Since figures were rounded up, their grand total may not equal to the actual sum.


7


RECOGNISED PROPERTY SALESIn the first half of 2019, the Group recognised total sales of approximately RMB14,386 million from property development with an area of approximately 531,000 square metres. The breakdown of the recognised sales by project is as follows:

Region and Project

Sales Recognisedin the First Half


Yangtze River Delta Region 764 5%1. Shanghai Jiading Project 292. Shanghai Poly Elegant Mansion 243. Shanghai Poly Deluxe Mansion 1574. Suzhou Poly West Bank Villa 385. Suzhou Poly Lake Mansion 76. Ningbo Poly Wonderland 397. Yuyao Poly Jordan International 4338. Deqing Poly Origin 289. Others 7Pearl River Delta Region 3,516 25%10. Guangzhou Poly Golf Shire 3111. Guangzhou Poly Zephyr City 2212. Guangzhou Poly Gratified West Bay 9013. Guangzhou Nansha Poly City 1,01514. Guangzhou Poly Jade Hills 11915. Foshan Poly Prestige City 1716. Foshan Poly Central Park 1,17317. Shenzhen Poly Up Town 2518. Huizhou Poly Deutch Kultur 9119. Huizhou Poly Sunshine Town 89920. Others 34Southwestern Regions 1,725 12%21. Nanning Poly Aegean Sea 4522. Nanning Poly Hearty 7323. Nanning Poly Crescendo 71324. Guiyang Poly Spring Street 3625. Guiyang Poly Park 2010 7226. Guiyang Poly Phoenix Bay 5527. Zunyi Poly Metropolis of Future 54328. Kunming Poly One Family One World 14729. Others 40


8


Region and Project

Sales Recognisedin the First Half


Other Regions 607 4%30. Wuhan Poly Blue Ocean District 1631. Wuhan Poly Up Town 4632. Wuhan Poly City 15833. Jinan Poly Garden 5834. Jinan Poly Center 19435. Jinan Poly Elegant Garden 4836. Weihai Poly Maple Valley 1537. Wanning Poly Peninsula No.1 2738. Others 46Hong Kong, Macau and Overseas Regions 7,774 54%39. Hong Kong Kai Tak Vibe Centro 7,774

Total 14,386 100%

Note:

1. Since figures were rounded up, their total may not equal to the actual sum of their grand total or sub-total.

NEW LAND RESERVESIn the first half of 2019, Poly Property Group acquired four projects, which are located in Shenzhen, Suzhou, Hong Kong and Foshan, respectively. The planned total gross floor area of the new projects amounted to approximately 2,554,000 square metres with land cost at a reasonable level.

New ProjectPlanned Property Type

Total Site Area

Planned Total Gross Floor Area


the Group(’000 square

metres)(’000 square

metres) (%)

Shenzhen Long Gang Project Commercial and Residential

283 2,101 50%

Suzhou Mu Du Project Residential 36 106 51%Hong Kong Kai Tak 6553

ProjectCommercial and

Residential9 93 35%

Foshan Lun Jiao Project Commercial and Residential

75 254 100%

Total 403 2,554


9


Shenzhen Long Gang ProjectThe project is located in the north to the center of Longgang, Shenzhen and is well-positioned with convenient transportation and thriving commercial activities and comfortable living environment. As the region is one of the most vibrant districts in Shenzhen, the project is expected to have ample market capacity and high sell-through rate. The project, with a planned gross floor area of approximately 2,101,000 square metres, is an urban renewal project and will be developed into rigid demand products of the first-tier city.

Suzhou Mu Du ProjectThe project is located in Mudu Town, Wuzhong District, Suzhou. It is close to Metro Line No. 5 which is under construction and enjoys convenient transportation. The region is well surrounded by educational, commercial and medical facilities. The project, with a planned gross floor area of approximately 106,000 square metres, is intended to be developed into high-rise residential buildings.

Hong Kong Kai Tak 6553 ProjectThe project is located in the runway of the former Kai Tak airport, Kowloon, Hong Kong. The site enjoys the fascinating Victoria Harbor view with great development potential. The Hong Kong government plans to develop Kai Tak region into a unique, vibrant, aesthetic and sharing community. The project, with a planned gross floor area of approximately 93,000 square metres, is intended to be developed into high-rise residential buildings.

Foshan Lun Jiao ProjectThe project is located in Lunjiao Street, Shunde District, Foshan, 400 metres from the station of Metro Line No. 3 with access to convenient transportation. The site is close to Foshan Poly Central Park and Foshan Shun De Project, surrounded by well-developed educational, commercial and medical facilities. The project, with a planned gross floor area of approximately 254,000 square metres, is intended to be developed into high-rise residential buildings.


10


INVESTMENT PROPERTIESThe Group has various investment properties and hotels located in first-tier cities and second-tier provincial capitals. Its investment properties have a total gross floor area of approximately 809,000 square metres and asset value of approximately HK$12.5 billion. In the first half of 2019, the occupancy rates for the Group’s office buildings and shopping malls remained steady. The rental rates achieved higher as compared to the corresponding period of last year. The hotel operations also performed reasonably well.

LocationMajor Investment Properties and Hotels

Gross Floor Area Held


the Group Property Type(’000 square

metres) (%)

Investment PropertiesBeijing Beijing Poly Plaza 15 75% OfficeShanghai Shanghai Poly Plaza (partial) 34 100% Office and

commercialShanghai Shanghai Stock Exchange

Building (partial)48 100% Office

Shenzhen Shenzhen Poly Cultural Plaza (partial)

135 100% Commercial

Wuhan Wuhan Poly Plaza (partial) 97 100% Office and commercial

Guiyang Guiyang Poly International Center

52 66.5% Commercial

HotelsBeijing Beijing Poly Plaza Hotel 63 75% HotelWuhan Wuhan Poly Hotel 28 100% HotelGuiyang Guiyang Poly Hot Spring Hotel 39 66.5% Hotel

PROPERTY MANAGEMENTThe Group has various property management companies engaging in the management of residential, commercial, offices, hotels, theatres and other property types. They have been the leading players in the property management industry of China and have received numerous titles and awards.

In the first half of 2019, the Group’s property management companies recorded revenue of RMB417 million in aggregate, representing an increase of 14.9% when comparing with the corresponding period of last year. The companies managed a total of 209 property projects with an aggregate gross floor area of approximately 35,510,000 square metres, representing an increase of 11.1% when comparing with the corresponding period of last year.


11


FINANCIAL REVIEWLiquidity and Capital StructureAs at 30 June 2019, the shareholders’ equity of the Group amounted to HK$32,955,964,000 (31 December 2018: HK$29,889,095,000), while the net asset value per share was HK$9 (31 December 2018: HK$8.16). As at 30 June 2019, the Group’s gearing ratio (on the basis of the amount of total liabilities divided by total assets) was 76.3% (31 December 2018: 78.1%).

As at 30 June 2019, the Group had outstanding bank and other borrowings (including the notes payable) of HK$57,979,637,000. In terms of maturity, the outstanding bank and other borrowings (including the notes payable) can be divided into HK$20,255,984,000 (34.9%) to be repaid within one year, HK$14,490,983,000 (25%) to be repaid after one year but within two years, HK$17,060,545,000 (29.4%) to be repaid after two years but within five years and HK$6,172,125,000 (10.7%) to be repaid after five years. In terms of currency denomination, the outstanding bank and other borrowings (including the notes payable) can be divided into HK$43,887,993,000 (75.7%) in Renminbi, HK$3,900,000,000 (6.7%) in United States dollars and HK$10,191,644,000 (17.6%) in Hong Kong dollars.

36.4% of the bank and other borrowings (including the notes payable) of the Group are subject to fixed interest rates and the remaining 63.6% are subject to floating interest rates. Therefore, under circumstances of uncertainty or fluctuations of interest rates or otherwise as appropriate, the Group will consider the use of hedging instruments (including interest rates swaps), in order to manage interest rate risks.

As at 30 June 2019, the Group had net current assets of HK$46,258,347,000 and total bank balances of HK$31,438,448,000 (31 December 2018: HK$47,889,262,000 and HK$27,354,481,000, respectively). With the available banking facilities and cash revenue from business operations, it is believed that the Group has sufficient resources to meet the foreseeable working capital demands and capital expenditure.

The monetary assets and liabilities and business transactions of the Group are mainly carried out and conducted in Hong Kong dollars, United States dollars and Renminbi. The Group maintains a prudent strategy in its foreign exchange risk management, where foreign exchange risks are minimised by balancing the monetary assets versus monetary liabilities, and foreign exchange revenue versus foreign exchange expenditures. The management believes that the foreign exchange rate between Hong Kong dollars and United States dollars is relatively stable. On the other hand, due to recent fluctuation of Renminbi exchange rate against Hong Kong dollars, the Group would closely monitor the fluctuation and adopt policy to minimise exchange rate risks, if necessary.


12


Pledge of AssetsAs at 30 June 2019, the carrying value of the Group’s assets which were pledged to secure credit facilities granted to the Group are as follows:

30 June 31 December2019 2018

HK$’000 HK$’000

Investment properties 5,975,753 6,031,545Hotel properties 156,136 151,724Buildings 94,841 95,931Prepaid lease payments 60,204 61,656Properties under development 22,923,060 19,685,181Properties held for sale 789,660 924,713Bank deposits 3,934,743 4,201,597

33,934,397 31,152,347

In addition to above pledge of assets, as at 30 June 2019, the Group’s interests in certain subsidiaries were pledged to secure credit facilities granted to the Group. The details of net asset value of subsidiaries are as follows:


HK$’000 HK$’000

Total assets 12,852,223 11,584,681Total liabilities (12,080,101) (10,680,886)

772,122 903,795

There are duplication between the carrying value of the Group’s assets and the Group’s interests in certain subsidiaries being pledged.

As at 30 June 2019, the Group’s interests in joint ventures were pledged to secure the credit facilities granted to a subsidiary and a joint venture. The pledged interests were amounting to HK$3,707,213,000 (31 December 2018: HK$3,713,975,000).


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Contingent LiabilitiesThe Group arranged mortgage loan facilities with certain banks for purchasers of property units and provided guarantees to banks to secure obligations of such purchasers of repayment. The maximum guarantees given to banks amounted to HK$25,120,107,000 as at 30 June 2019 (31 December 2018: HK$24,775,663,000). Such guarantees will terminate upon the earlier of (i) issue of the real estate ownership certificate; and (ii) the satisfaction of the mortgage loans by the buyers of the properties. The Group has not recognised any deferred income in respect of these guarantees as its fair value is considered to be minimal by the Directors. The Directors also consider that the fair value of the underlying properties is able to cover the outstanding mortgage loan guaranteed by the Group in the event the purchasers default payments to the banks.

At 30 June 2019, the Group had given guarantees to certain banks in respect of credit facilities granted to certain joint ventures of the Group amounting to HK$1,387,499,000 (31 December 2018: HK$3,923,226,000), of which HK$1,373,383,000 (31 December 2018: HK$3,909,068,000) had been utilised by these joint ventures.

EVENTS AFTER REPORTING PERIODThere are no significant events subsequent to 30 June 2019 which would materially affect the Group’s operation and financial performance as at the date of this report.

EMPLOYEESAs at 30 June 2019, the Group employed 11,448 (30 June 2018: 12,894) employees with remuneration for the period amounted to approximately HK$692 million. The Group provides its employees with various benefits including year-ended double-pay, discretionary bonus, contributory provident fund, share options and medical insurance. On-the-job training is also provided as and when required.


14

INTERIM RESULTS

The directors (the “Directors/Board”) of Poly Property Group Co., Limited (the “Company”) hereby announce the unaudited condensed consolidated results of the Company and its subsidiaries (the “Group”) for the six months ended 30 June 2019 with comparative figures for the six months ended 30 June 2018 as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSSSix months ended 30 June

2019 2018Notes HK$’000 HK$’000

(Unaudited) (Unaudited)

Revenue 3 17,493,954 6,992,149Cost of sales (10,073,465) (4,503,665)

Gross profit 7,420,489 2,488,484Increase in fair value of investment properties 34,091 32,000Increase/(decrease) in fair value of financial

assets 28,418 (1,961)Other gains, net 98,192 340,130Selling expenses (539,080) (296,898)Administrative expenses (642,099) (576,858)Other operating expenses (144,778) (131,773)Gain on step-up acquisition of a subsidiary 24 53,330 —Finance costs (741,528) (549,232)Share of results of associates (23,937) (5,870)Share of results of joint ventures 259,083 70,767

Profit before income tax expense 4 5,802,181 1,368,789Income tax expense 5 (1,786,860) (691,860)

Profit for the period 4,015,321 676,929

Attributable to:Owners of the Company 3,737,636 620,804Non-controlling interests 277,685 56,125

4,015,321 676,929

Earnings per share (expressed in HK cents) 7— Basic 102.08 16.95

— Diluted 101.65 16.95


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INTERIM RESULTS

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMESix months ended 30 June

2019 2018HK$’000 HK$’000


Profit for the period 4,015,321 676,929

Other comprehensive incomeItems that may be reclassified subsequently to profit or loss:

Exchange differences arising on translation of financial statements of foreign operations (307,895) 36

Items that will not be reclassified to profit or loss:Surplus arising on revaluation of properties 70,045 22,496

Other comprehensive income before tax (237,850) 22,532Deferred tax liability arising on revaluation of properties (17,511) (5,623)

Other comprehensive income for the period, net of tax (255,361) 16,909

Total comprehensive income for the period 3,759,960 693,838

Attributable to:Owners of the Company 3,504,349 633,019Non-controlling interests 255,611 60,819

3,759,960 693,838


16

INTERIM RESULTS

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION30 June

201931 December

2018Notes HK$’000 HK$’000

(Unaudited) (Audited)

Non-current assetsInvestment properties 9 12,465,016 12,571,809Property, plant and equipment 9 3,817,079 3,878,612Right-of-use assets 2(a) 7,967 —Prepaid lease payments — non-current portion 10 361,257 372,363Interests in associates 251,304 264,576Interests in joint ventures 7,627,723 7,773,395Financial assets at fair value through profit or

loss 26 450,679 426,941Loan receivables 219,422 216,021Deposits paid for acquisition of land use rights 3,850,958 1,921,839Deferred tax assets 329,184 327,848

Total non-current assets 29,380,589 27,753,404

Current assetsProperties under development 55,993,297 52,885,536Properties held for sale 22,021,309 28,197,992Other inventories 61,857 46,478Contract costs 194,341 465,069Trade and other receivables 11 5,767,488 5,151,482Prepaid lease payments-current portion 10 12,618 11,995Amounts due from associates 12 780,574 1,228,259Amounts due from joint ventures 13 2,490,542 3,015,072Amounts due from non-controlling

shareholders of subsidiaries 858,423 862,587Taxation recoverable 2,370,309 1,691,067Pledged bank deposits 3,934,743 4,201,597Bank balances, deposits and cash 27,503,705 23,152,884

Total current assets 121,989,206 120,910,018


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INTERIM RESULTS

30 June 2019

31 December 2018

Notes HK$’000 HK$’000(Unaudited) (Audited)

Current liabilitiesTrade and other payables 14 18,087,256 19,694,131Contract liabilities 29,400,586 31,110,373Property rental deposits 121,542 122,336Amount due to an associate 12 30,795 —Amounts due to joint ventures 13 2,228,525 3,518,574Amount due to the ultimate holding company 15 51,974 52,571Amount due to an intermediate holding

company 16 3,172 3,209Amounts due to fellow subsidiaries 17 1,361 1,377Amounts due to non-controlling shareholders

of subsidiaries 2,293,113 2,395,404Taxation payable 3,256,551 2,282,487Bank and other borrowings — due within

one year 18 20,255,984 13,840,294

Total current liabilities 75,730,859 73,020,756

Net current assets 46,258,347 47,889,262

Total assets less current liabilities 75,638,936 75,642,666

Capital and reserves attributable to owners of the Company

Share capital 19 17,685,677 17,685,677Reserves 15,270,287 12,203,418

Equity attributable to owners of the Company 32,955,964 29,889,095

Non-controlling interests 2,908,918 2,670,318

Total equity 35,864,882 32,559,413


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INTERIM RESULTS

30 June 2019

31 December 2018

Notes HK$’000 HK$’000(Unaudited) (Audited)

Non-current liabilitiesBank and other borrowings

— due after one year 18 33,028,198 36,460,925Notes payable 20 4,695,455 4,704,598Lease liabilities 2(a) 3,367 —Loan from a fellow subsidiary 204,545 206,897Deferred tax liabilities 1,842,489 1,710,833

Total non-current liabilities 39,774,054 43,083,253

75,638,936 75,642,666


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INTERIM RESULTS

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six months ended 30 June 2019

Attributable to owners of the Company

Share capital

Share Option reserve

Hotel properties

revaluation reserve

Translation reserve

PRC statutory reserves

Other capital

reserve

Asset revaluation

reserveOther

reserveAccumulated

profits Total

Non-controlling

interests TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 January 2019 17,685,677 — 530,060 (120,740) 1,628,079 300,840 22,054 (296,096) 10,139,221 29,889,095 2,670,318 32,559,413Total comprehensive income

for the period — — 48,035 (281,322) — — — — 3,737,636 3,504,349 255,611 3,759,960Recognition of equity-settled share-based

payment expense — 12,889 — — — — — — — 12,889 — 12,889Dividends paid — — — — — — — — (450,369) (450,369) — (450,369)Dividends paid to non-controlling

shareholders of subsidiaries — — — — — — — — — — (17,011) (17,011)

At 30 June 2019 17,685,677 12,889 578,095 (402,062) 1,628,079 300,840 22,054 (296,096) 13,426,488 32,955,964 2,908,918 35,864,882

For the six months ended 30 June 2018

Attributable to owners of the Company

Share

capital

Hotel

properties

revaluation

reserve

Translation

reserve

PRC statutory

reserves

Investment

revaluation

reserve

Other

capital

reserve

Asset

revaluation

reserve Other reserve

Accumulated

profits Total

Non-

controlling

interests Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 31 December 2017 17,685,677 127,885 691,467 1,393,345 (28,754) 306,899 22,054 (216,081) 8,313,872 28,296,364 2,520,217 30,816,581

Effect of adoption of HKFRS 9 — — — — 28,754 — — — 68,697 97,451 — 97,451

Effect of adoption of HKFRS 15 — — — — — — — — 238,045 238,045 16,482 254,527

At 1 January 2018 17,685,677 127,885 691,467 1,393,345 — 306,899 22,054 (216,081) 8,620,614 28,631,860 2,536,699 31,168,559

Total comprehensive income

for the period — 12,179 36 — — — — — 620,804 633,019 60,819 693,838

Dividends paid — — — — — — — — (494,308) (494,308) — (494,308)

Capital contribution by non-controlling

shareholders of subsidiaries — — — — — — — — — — 4,167 4,167

Acquisition of subsidiaries — — — — — — — — — — 3,571 3,571

Release upon dissolution of subsidiaries — — — (20,529) — (6,275) — — 26,804 — (5,580) (5,580)

At 30 June 2018 17,685,677 140,064 691,503 1,372,816 — 300,624 22,054 (216,081) 8,773,914 28,770,571 2,599,676 31,370,247


20

INTERIM RESULTS

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSSix months ended 30 June

2019 2018HK$’000 HK$’000


Operating activitiesCash generated from operations 5,799,857 5,674,386Tax paid (1,523,463) (1,870,929)Interest paid (1,287,136) (1,367,207)

Net cash generated from operating activities 2,989,258 2,436,250

Investing activitiesAcquisition of a subsidiary — (3,749,739)Step-up acquisition of a subsidiary 662,009 —Decrease/(increase) in pledged bank deposits 266,854 (28,525)Repayment from/(advance to) associates 433,745 (910,382)Repayment from joint ventures 493,086 636,304Other cash flows arising from investing activities 81,191 115,591

Net cash generated from/(used in) investing activities 1,936,885 (3,936,751)

Financing activitiesDividends paid to equity shareholders of the Company (450,369) (494,308)Borrowings raised 10,354,549 9,256,580Repayments of borrowings (8,957,403) (8,446,287)Payments of lease liabilities (2,257) —(Repayment to)/advance from joint ventures (1,250,066) 1,778,999Other cash flows arising from financing activities (123,183) (875,687)

Net cash (used in)/generated from financing activities (428,729) 1,219,297

Net increase/(decrease) in cash and cash equivalents 4,497,414 (281,204)

Cash and cash equivalents at beginning of the period 23,152,884 20,921,650

Effect of exchange rate changes on cash and cash equivalents (146,593) —

Cash and cash equivalents at end of the period 27,503,705 20,640,446

Analysis of the balance of cash and cash equivalents, represented by— bank balances, deposits and cash 27,503,705 20,640,446


21

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATIONThe condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The condensed consolidated financial statements have been prepared in accordance with the same accounting policies adopted in the most recent consolidated financial statements for the year ended 31 December 2018, except for the changes in accounting policy made when the Group initially applies financial reporting standards newly applicable to the annual accounting period beginning on 1 January 2019.

The preparation of condensed consolidated financial statements in conformity with HKAS 34 requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

This interim report contains condensed consolidated financial statements and selected explanatory notes. The explanatory notes include an explanation of events and transactions that are significant to the understanding of the changes in financial position and performance of the Group since the most recent consolidated financial statements for the year ended 31 December 2018. The condensed consolidated financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).

The financial information relating to the financial year ended 31 December 2018 that is included in this interim report of the interim results for the six months ended 30 June 2019 as comparative information does not constitute the Company’s statutory annual consolidated financial statements for that financial year but is derived from those financial statements. Further information relating to these statutory financial statements disclosed in accordance with section 436 of the Hong Kong Companies Ordinance (Cap. 622) is as follows:

The Company has delivered the financial statements for the year ended 31 December 2018 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance (Cap. 622).

The Company’s auditor has reported on those financial statements. The auditor’s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance (Cap. 622).

此section唔好落Markup


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The HKICPA has issued the following amendments to HKFRSs that are first effective for the current accounting period of the Group. Of these, the following amendments are relevant to the Group:

HKAS 19 (Amendments) Employee BenefitsHKAS 28 (Amendments) Long-term Interests in Associates and Joint VenturesHKFRS 9 (Amendments) Prepayment Features with Negative CompensationHKFRS 16 LeasesAnnual Improvements to 2015–2017 Cycle Improvements to HKFRSHK (IFRIC) 23 Uncertainty over Income Tax Treatments

The Group has assessed the impact of the adoption of these new and amended standards that are effective for the first time for this interim. The Group had to change its accounting policies and made adjustments as a result of adoption the following standard:

• HKFRS 16 Leases

The impact of the adoption of this standard and the new accounting policy are disclosed in note 2. The other standards, amendments and interpretation did not have any material impact on the Group’s accounting policies and did not require retrospective adjustments.

The following new/revised HKFRSs, potentially relevant to the Group’s financial statements, have been issued, but are not yet effective and have not been early adopted by the Group. The Group’s current intention is to apply these changes on the date they become effective.

HKFRS 10 and HKAS 28 (Amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture2

HKFRS 17 Insurance Contracts1

1 Effective for annual periods beginning on or after 1 January 20212 To be announced

The Group has already commenced an assessment of the impact of adopting the above standards and amendments to existing standards to the Group. The Group is not yet in a position to state whether these new pronouncements will result in substantial changes to the Group’s accounting policies and financial statements.


23


2. CHANGES IN ACCOUNTING POLICIESThis note explains the impact of the adoption of HKFRS 16 Leases on the Group’s financial statements and discloses the new accounting policies that have been applied from 1 January 2019 in note 2(b) below.

(a) Impact of adoptionHKFRS 16 affects the accounting for the Group’s operating leases. The adoption of HKFRS 16 resulted in changes in accounting policies and adjustments to amounts recognised in the financial statements. The new accounting policies are set out in note 2(b) and the adjustments to the financial statements are set out below.

Prior to the adoption of HKFRS 16, leases where substantially all the rewards and risks of ownership of assets remained with the lessor were accounted for as operating leases. Operating lease rentals were recognised under operating expenses in the condensed consolidated statement of profit or loss on a straight-line basis over the lease term. Commitments under operating leases for future periods were not recognised as liabilities.

Upon adoption of HKFRS 16, the operating leases (except for short-term leases with lease terms of less than 12 months) are recognised in the condensed consolidated statement of financial position as right-of-use assets and lease liabilities (see note 2(b) below).

The Group has applied HKFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in the opening balance at 1 January 2019. As permitted by the transitional provision of HKFRS 16, comparatives for 2018 were not restated. The Group has used the following practical expedients permitted by the standard:

• the use of a single discount rate to a portfolio of leases with reasonably similar characteristics in the same region;

• the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases;

• the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and

• the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

At initial application, the opening balances of lease liabilities and the corresponding right-of-use assets are adjusted to HK$10,436,000, after taking into account the effects of discounting as at 1 January 2019.



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The following table shows the adjustments recognised for each individual line item in the opening condensed consolidated statement of financial position on 1 January 2019. Line items that were not affected by the changes have not been included, and therefore the line items disclosed do not add up to the sub-totals and totals below.

Condensed consolidated statement of financial position (extracts)

31 December2018

As originallypresented

Impact fromadoption of

HKFRS 16

1 January2019

RestatedHK$’000 HK$’000 HK$’000

Non-current assetsRight-of-use assets — 10,436 10,436

Total assets 148,663,422 10,436 148,673,858

Current liabilitiesTrade and other payables 19,694,131 4,613 19,698,744

Non-current liabilitiesLease liabilities — 5,823 5,823

Total liabilities 116,104,009 10,436 116,114,445

The following table shows the reconciliation from operating lease commitments disclosed under HKAS 17 Leases as at 31 December 2018 to lease liabilities upon adoption of HKFRS 16 as at 1 January 2019.

HK$’000

Operating lease commitments disclosed under HKAS 17 as at 31 December 2018 36,726

Discounted using the leases incremental borrowing rate at 1 January 2019 (varied from different regions, ranging from 4.02% to 5.59%) (591)

Less: short-term and low value leases are recognised on a straight-line basis as expenses (25,699)

Lease liabilities recognised as at 1 January 2019 10,436

Current lease liabilities 4,613Non-current lease liabilities 5,823

10,436


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The following tables show the impact on each individual line item of the condensed consolidated statement of profit or loss for the six months ended 30 June 2019, and the condensed consolidated statement of financial position as at 30 June 2019 following the adoption of HKFRS 16. Line items that were not affected by the changes have not been included, and therefore the line items disclosed do not add up to the subtotals and totals below.

Six months ended 30 June 2019

Condensed consolidated statement of profit or loss (extracts)

Before adoption of HKFRS 16

Impact from adoption of

HKFRS 16 As reportedHK$’000 HK$’000 HK$’000

Administrative expenses (642,168) 69 (642,099)Finance costs (741,309) (219) (741,528)Profit for the period 4,015,471 (150) 4,015,321

30 June 2019

Condensed consolidated statement of financial position (extracts)

Before adoption of HKFRS 16

Impact from adoption of

HKFRS 16 As reportedHK$’000 HK$’000 HK$’000

Non-current assetsRight-of-use assets — 7,967 7,967

Total assets 151,361,828 7,967 151,369,795

Current liabilitiesTrade and other payables 18,082,506 4,750 18,087,256

Non-current liabilitiesLease liabilities — 3,367 3,367

Total liabilities 115,496,796 8,117 115,504,913



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(b) Accounting policies applied from 1 January 2019A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

The lease liability is measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made.

The Group recognises a right-of-use asset equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments recognised immediately before the date of initial application, and subsequently at cost less any accumulated depreciation and impairment losses. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.

Payments associated with short-term leases (ie, leases with a lease term of 12 months or less) and low value leases are recognised on a straight-line basis as an expense in the condensed consolidated statement of profit or loss.

3. REVENUE AND SEGMENT INFORMATIONFor management purposes, the Group is organised into four operating divisions. These divisions are the basis on which the Group reports its segment information.

Principal activities are as follows:

Property development business — property development

Property investment and management — property investment and management

Hotel operations — hotel and restaurant business and its related services

Other operations — manufacturing and sales of digital discs and others


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Information about these segments is presented below:


Property development

business

Property investment

and management

Hotel operations

Other operations Eliminations Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

REVENUEExternal revenue 16,473,205 828,007 160,360 32,382 — 17,493,954Inter-segment revenue* — 45,996 — — (45,996) —

Total revenue 16,473,205 874,003 160,360 32,382 (45,996) 17,493,954

SEGMENT RESULTS 6,109,760 199,895 (61,144) 43,059 — 6,291,570

Unallocated income 92,334Unallocated expenses (128,671)Gain on step-up acquisition of

a subsidiary 53,330 53,330Finance costs (741,528)Share of results of associates (23,937) (23,937)Share of results of joint

ventures 259,083 259,083

Profit before income tax expense 5,802,181

Income tax expense (1,786,860)

Profit for the period 4,015,321

*　 Inter-segment revenue were charged with reference to prices charged to external parties for similar services or products.



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At 30 June 2019Assets and liabilities


business

Property investment

and management

Hotel operations

Other operations Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

AssetsSegment assets 92,265,769 12,949,269 3,346,829 754,395 109,316,262Interests in associates 249,120 — — 2,184 251,304Interests in joint ventures 7,626,258 — — 1,465 7,627,723Unallocated corporate assets 34,174,506

Total assets 151,369,795

LiabilitiesSegment liabilities 50,852,365 1,294,073 199,916 20,523 52,366,877Unallocated corporate liabilities 63,138,036

Total liabilities 115,504,913



business

Property investment and

managementHotel

operationsOther

operations Eliminations TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

REVENUEExternal revenue 6,094,919 765,603 96,565 35,062 — 6,992,149Inter-segment revenue* — 54,067 — — (54,067) —

Total revenue 6,094,919 819,670 96,565 35,062 (54,067) 6,992,149

SEGMENT RESULTS 1,639,898 182,589 (16,259) 178 — 1,806,406

Unallocated income 72,012Unallocated expenses (25,294)Finance costs (549,232)Share of results of associates (5,870) (5,870)Share of results of

joint ventures 70,267 500 70,767

Profit before income tax expense 1,368,789

Income tax expense (691,860)

Profit for the period 676,929

*　 Inter-segment revenue were charged with reference to prices charged to external parties for similar services or products.


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At 31 December 2018Assets and liabilities


business

Property investment and

managementHotel

operationsOther

operations TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000

AssetsSegment assets 94,004,362 13,082,711 3,395,323 715,853 111,198,249Interests in associates 261,508 — — 3,068 264,576Interests in joint ventures 7,771,429 — — 1,966 7,773,395Unallocated corporate assets 29,427,202

Total assets 148,663,422

LiabilitiesSegment liabilities 55,309,590 1,498,595 203,337 24,076 57,035,598Unallocated corporate liabilities 59,068,411

Total liabilities 116,104,009

4. PROFIT BEFORE INCOME TAX EXPENSESix months ended 30 June

2019 2018HK$’000 HK$’000

Profit before income tax expense is arrived at after charging/(crediting):

Amortisation of prepaid lease payments (included in administrative expenses) 6,116 5,261

Depreciation of property, plant and equipment 102,381 61,934Depreciation of right-of-use assets 2,408 —Interest on lease liabilities 219 —Share of tax of joint ventures (included in share of

results of joint ventures) 186,566 28,032(Gain)/loss on disposal of investment properties (425) 324



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5. INCOME TAX EXPENSESix months ended 30 June

2019 2018HK$’000 HK$’000

The charge comprises:

Hong Kong Profits Tax 522,266 —PRC Enterprise Income Tax 464,474 339,910Land Appreciation Tax (“LAT”) 825,778 341,174

1,812,518 681,084Deferred taxation (25,658) 10,776

1,786,860 691,860

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for the period ended 30 June 2019. No provision for Hong Kong Profits Tax has been made for the six months ended 30 June 2018 as there is no assessable profit for the period.

The PRC Enterprise Income Tax is calculated at 25% based on the estimated assessable profit for the period.

Certain PRC subsidiaries are also subject to the PRC LAT which is levied at progressive rates ranging from 30% to 60% on the appreciation of properties, being the proceeds from sales of properties less deductible expenditure including costs of land use rights and development and construction.

6. DIVIDENDSThe Directors have decided not to declare any interim dividend for the six months ended 30 June 2019 (six months ended 30 June 2018: HK$Nil).

The Company paid final dividends, in respect of the previous financial year, of HK$0.123 per share during the period.


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7. EARNINGS PER SHAREThe calculation of basic and diluted earnings per share for the six months ended 30 June 2019 is based on the following data:

Six months ended 30 June2019 2018

HK$’000 HK$’000

Earnings:Profit for the period attributable to owners of the

Company 3,737,636 620,804


Number of shares:Weighted average number of ordinary shares for the

purposes of basic earnings per share 3,661,537,046 3,661,537,046Effect of dilutive potential ordinary shares on share

options 15,595,799 —

Weighted average number of ordinary shares for the purposes of diluted earnings per share 3,677,132,845 3,661,537,046

8. TRANSFER TO AND FROM RESERVESDuring the six months ended 30 June 2019, the Group’s subsidiaries in the PRC did not appropriate any amount net of non-controlling interests’ share out of accumulated profits to the PRC statutory reserves (six months ended 30 June 2018: HK$Nil), and the Group’s subsidiaries in the PRC did not release any amount net of non-controlling interests’ share out of the PRC statutory reserves to accumulated profits (six months ended 30 June 2018: HK$20,529,000).



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9. MOVEMENTS IN INVESTMENT PROPERTIES AND PROPERTY, PLANT AND EQUIPMENTThe Group’s investment properties decreased HK$107 million during the period ended 30 June 2019 (30 June 2018: net increase HK$24 million).

During the period ended 30 June 2019, Renminbi depreciated against Hong Kong dollars incurred HK$140 million decrease in investment properties (30 June 2018: HK$Nil). The decrease was offset by increase in fair value of investment properties of HK$34 million (30 June 2018: HK$32 million).

During the period ended 30 June 2018, the increase was offset by disposal of investment properties of HK$8 million.

The Group’s property, plant and equipment decreased HK$62 million during the period ended 30 June 2019 (30 June 2018: HK$34 million).

During the period ended 30 June 2019, Renminbi depreciated against Hong Kong dollars incurred HK$42 million decrease in property, plant and equipment (30 June 2018: HK$Nil). The depreciation charge of HK$102 million during the current period was noted (30 June 2018: HK$62 million).

The surplus arising on revaluation of hotel properties of HK$70 million was noted as at 30 June 2019 (30 June 2018: HK$22 million). Additions of capital expenditure paid for construction in progress and additions of motor vehicles and furniture and fixture amounted to HK$14 million (30 June 2018: HK$6.6 million).

The Group’s investment properties and hotel properties at 30 June 2019 were valued by AA Property Services Limited, an independent professional surveyor and property valuer not connected with the Group. AA Property Services Limited is a member of the Hong Kong Institute of Surveyors and has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. The valuation was arrived at using the same valuation techniques as were used by this valuer when carrying out the valuations at 31 December 2018.


33


10. PREPAID LEASE PAYMENTS30 June 31 December

2019 2018HK$’000 HK$’000

The Group’s prepaid lease payments comprise:— medium-term land use rights in the PRC 373,875 384,358

The Group’s prepaid lease payments comprise:— current asset 12,618 11,995— non-current asset 361,257 372,363

373,875 384,358

Upon the transition to HKFRS 16 on 1 January 2019, the prepaid lease payments were regarded as right-of-use assets.

11. TRADE AND OTHER RECEIVABLESThe credit terms in connection with sales of properties granted to the customers are set out in the sale and purchase agreements and vary from agreements. There is no concentration of credit risk with respect to trade receivables which arise from sales of properties as the Group has numerous customers. In respect of sales of goods to trade customers, the Group allows an average credit periods ranging from 30 days to 90 days. The following is an aged analysis of trade receivables net of allowance for doubtful debts at the end of the reporting period:


HK$’000 HK$’000

0 to 30 days 153,706 108,16431 to 90 days 20,455 10,566More than 90 days 71,271 111,041

Total trade receivables 245,432 229,771Other receivables 5,522,056 4,921,711

5,767,488 5,151,482



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12. AMOUNTS DUE FROM/(TO) ASSOCIATES30 June 31 December

2019 2018HK$’000 HK$’000

Amounts due from associates— Interest-free 43,442 63,245— Fixed rate of 6% 392,159 725,402— Fixed rate of 8% 211,363 213,793— Fixed rate of 10% 133,610 225,819

780,574 1,228,259

Amount due to an associate — Fixed rate of 9% 30,795 —

The amounts are unsecured and repayable on demand.

13. AMOUNTS DUE FROM/(TO) JOINT VENTURES30 June 31 December

2019 2018HK$’000 HK$’000

Amounts due from joint ventures— Interest-free 1,593,794 867,988— Fixed rate of 5% — 308,580— Fixed rate of 7% 356,534 360,632— Fixed rate of 8% 178,239 435,437— Fixed rate of 10% — 503,885— 110% of benchmark rate in the PRC 361,975 538,550

2,490,542 3,015,072

Amounts due to joint ventures— Interest-free 1,026,058 741,562— Fixed rate of 4.35% — 1,154,023— Fixed rate of 5.34% — 243,678— Fixed rate of 6.85% 1,202,467 1,379,311

2,228,525 3,518,574



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14. TRADE AND OTHER PAYABLESThe following is an aged analysis of trade payables based on the invoice date at the end of the reporting period:


HK$’000 HK$’000

0 to 30 days 2,527,892 4,965,99931 to 90 days 605,591 121,024More than 90 days 5,996,695 6,112,676

Total trade payables 9,130,178 11,199,699Bills payables 52,955 42,587Other payables 8,904,123 8,451,845

18,087,256 19,694,131

15. AMOUNT DUE TO THE ULTIMATE HOLDING COMPANY30 June 31 December

2019 2018HK$’000 HK$’000

Interest-free 21,401 21,64792% of benchmark rate in the PRC 30,573 30,924

51,974 52,571

The amounts are unsecured and repayable on demand or within one year.

16. AMOUNT DUE TO AN INTERMEDIATE HOLDING COMPANY30 June 31 December

2019 2018HK$’000 HK$’000

Interest-free 3,172 3,209




36


17. AMOUNTS DUE TO FELLOW SUBSIDIARIESThe amounts are interest-free, unsecured and repayable on demand.

18. BANK AND OTHER BORROWINGSDuring the period, the Group obtained new bank and other borrowings in the amounts of HK$10,354 million (30 June 2018: HK$9,257 million), which bear interest at market rates. Also, the acquisition of a subsidiary generated HK$2,042 million increase in bank and other borrowings (30 June 2018: HK$Nil).

The increase was offset by repayment of bank and other borrowings of approximately HK$8,957 million (30 June 2018: HK$8,446 million) during the period. Renminbi depreciated against Hong Kong dollars during the period ended 30 June 2019 incurred HK$456 million decrease in bank and other borrowings (30 June 2018: HK$Nil).

19. SHARE CAPITALNumber of

ordinary shares AmountHK$’000

Ordinary shares, issued and fully paid:At 1 January 2019 and 30 June 2019 3,661,537,046 17,685,677

20. NOTES PAYABLEThe Group has issued the following notes payable:

(i) On 10 April 2018 and 7 May 2018, the Group issued the 5.2% notes due in 2021 in the aggregate principal amount of US$500,000,000 (equivalent to HK$3,900,000,000). The notes bear interest at the rate of 5.2% per annum, which are payable semi-annually in arrears on the interest payment dates falling 10 April and 10 October in each year.

(ii) On 22 August 2018, the Group issued the 5.28% notes due in 2021 in the aggregate principal amount of RMB700,000,000 (equivalent to HK$795,455,000). The note bears interest at the rate of 5.28% per annum. The notes are payable annually in arrears on the interest payment date falling 13 August in each year.

(iii) On 16 May 2013, the Group issued the 4.75% notes due in May 2018 in the aggregate principal amount of US$500,000,000 (equivalent to HK$3,900,000,000). The notes bear interest at the rate of 4.75% per annum, which are payable semi-annually in arrears on the interest payment dates falling 16 May and 16 November in each year. The notes were settled in May 2018.


37


21. CONTINGENT LIABILITIESThe Group arranged mortgage loan facilities with certain banks for purchasers of property units and provided guarantees to banks to secure obligations of such purchasers of repayment. The maximum guarantees given to banks amounted to HK$25,120,107,000 as at 30 June 2019 (31 December 2018: HK$24,775,663,000). Such guarantees will terminate upon the earlier of (i) issue of the real estate ownership certificate; and (ii) the satisfaction of the mortgage loans by the buyers of the properties. The Group has not recognised any deferred income in respect of these guarantees as its fair value is considered to be minimal by the Directors. The Directors also consider that the fair value of the underlying properties is able to cover the outstanding mortgage loan guaranteed by the Group in the event the purchasers default payments to the banks.

At 30 June 2019, the Group had given guarantees to certain banks in respect of credit facilities granted to certain joint ventures of the Group amounting to HK$1,387,499,000 (31 December 2018: HK$3,923,226,000), of which HK$1,373,383,000 (31 December 2018: HK$3,909,068,000) had been utilised by these joint ventures.

22. CAPITAL COMMITMENTSCapital expenditure contracted for but not provided in the condensed consolidated financial statements in respect of property development expenditures amounted to HK$14,594,628,000 as at 30 June 2019 (31 December 2018: HK$9,864,682,000).

The Group did not have any capital expenditure authorised but not contracted for as at 30 June 2019 (31 December 2018: HK$Nil).

23. MATERIAL RELATED PARTY TRANSACTIONSDuring the current period, the Group entered into the following material related party transactions:

(I) Related parties


HK$’000 HK$’000

Property rental income (note a) 7,472 7,216Construction fee paid (note b) — 47,193Interest expenses (note c) 77,907 98,518Interest income (note d) 75,951 125,433Guarantee income (note e) — 15,362Management fee income 632 662Rental expenses paid 1,216 1,228Dividend income 9,931 —



38


Notes:

(a) The property rental income received from subsidiaries of the ultimate holding company, which were charged in accordance with the relevant tenancy agreement.

(b) The construction fee paid to a subsidiary of the ultimate holding company was charged at market rate, which was disposed to an independent third party and no longer being a fellow subsidiary to the Group with effect from May 2018.

(c) The interest expenses derived from loans advanced from the ultimate holding company, fellow subsidiaries and joint ventures which carried interest at a fixed rate of 4.35% to 9%, 92% of benchmark rate in the PRC to 110% of benchmark rate in the PRC and 7.27% plus the movement of the benchmark rate in the PRC.

(d) The interest income derived from loans advanced to associates and joint ventures, which carried interest at a fixed rate of 6% to 10% and 110% of benchmark rate in the PRC.

(e) The guarantee income was received from a joint venture for acting as a guarantor of bank loans borrowed by the joint venture and it was charged at 1% on the guarantee amount.

(II) Compensation to key management personnel


HK$’000 HK$’000

Short-term benefits 17,484 12,754Post-employment benefits 318 387

17,802 13,141

The remuneration of Directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.


39


24. STEP-UP ACQUISITION OF A SUBSIDIARYIn January 2019, the Group acquired additional 35.7% equity interest of 武漢常陽潤力房地產開發有限公司 (“武漢常陽潤力”) at the consideration of RMB195,000,000 (approximately HK$221,591,000). 武漢常陽潤力 was previously a joint venture of the Group.

The net assets acquired were as follows:

HK$’000 HK$’000

Share of net assets acquired 633,050Transferred from interests previously held and

classified as joint venture (358,129)Gain on step-up acquisition of a subsidiary— Gain on remeasurement of joint venture to

acquisition date fair value (48,922)— Gain on bargain purchase (4,408) (53,330)

221,591

Total consideration satisfied by:Cash 221,591

Net cash inflow arising on acquisition:Cash paid (221,591)Cash and bank balances in the subsidiary acquired 883,600

662,009



40


25. ACQUISITION OF A SUBSIDIARYIn January 2018, the Group entered into a sale and purchase agreement with a third party to acquire 100% equity interest in Active Success Consultants Limited at a consideration of HK$3,749,739,000.

Details of the net assets acquired are summarised below:

HK$’000

Net assets acquired:Interest in a joint venture 3,708,967Amount due from a joint venture 40,772Amount due to a shareholder (169,079)

Net assets acquired 3,580,660

Total consideration satisfied by:Cash 3,749,739Amount due to immediate holding company (169,079)

3,580,660

Net cash outflow arising on acquisition:Cash paid 3,749,739

26 FAIR VALUE MEASUREMENTS (i) Financial instruments carried at fair value

The fair value of financial assets are determined with reference to quoted market prices or using valuation techniques in which any significant input is not based on observable market data.

The following table presents financial instruments measured at fair value in the condensed consolidated statement of financial position on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13, “Fair Value Measurement”. The level into which a fair value measurement classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

• Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments

• Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which all significant inputs are directly or indirectly based on observable market data


41


• Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data

At 30 June 2019, the Group had following financial instruments carried at fair value all of which are based on the level 1 or level 3 of the fair value hierarchy:


HK$’000 HK$’000

AssetsFinancial assets at fair value through

profit or loss— Listed 13,627 15,053— Unlisted 437,052 411,888

450,679 426,941

There were no transfers between financial instruments in level 1 and level 3 during the reporting period.

(ii) The fair values of financial assets and financial liabilities are determined as follows:The fair values of financial assets with standard terms and conditions and traded on active liquid markets are determined with reference to quoted active bid prices and ask prices respectively; and the fair values of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions as input.


42

OTHER INFORMATION

INTERIM DIVIDENDThe Board has resolved not to declare any interim dividend for the six months ended 30 June 2019 (corresponding period in 2018: HK$Nil).

SHARE OPTION SCHEMEIn order to provide incentives or rewards to the Directors and employees of the Company and certain eligible persons (together, “Eligible Participants”) to contribute to the long term success of the business of the Group, the Board of Directors of the Company considers that it is in the best interest of the Company to adopt a share option scheme.

At the annual general meeting of the Company held on 28 May 2014, the shareholders of the Company adopted a share option scheme (the “Share Option Scheme”), pursuant to which the Eligible Participants may be granted a maximum of 364,463,704 options to subscribe for shares of the Company upon and subject to the terms and conditions of the rules of the Share Option Scheme. The Share Option Scheme shall be valid and effective for a period of 10 years commencing on the adoption date of 28 May 2014 and expiring on 27 May 2024.

According to the Share Option Scheme, the Board of Directors of the Company may grant options to (i) any Director and employee of the Company or its subsidiaries, or an entity in which the Group holds an interest (“Affiliate”); (ii) any customer, supplier, agent, partner, consultant, adviser or shareholder of or contractor to the Group or an Affiliate; (iii) the trustee of any trust the beneficiary of which or any discretionary trust the discretionary objects of which include any Director, employee, customer, supplier, agent, partner, consultant, adviser or shareholder of or contractor to the Group or an Affiliate; or (iv) a company beneficially owned by any Director, employee, consultant, customer, supplier, agent, partner, shareholder, adviser of or contractor to the Group or an Affiliate to subscribe for shares of the Company for a consideration of HK$1 for each lot of share options granted.

Share options granted should be accepted within 28 days from the date of grant. The Board of Directors may at its absolute discretion determine the period during which a share option may be exercised; such period should expire no later than 10 years from the date of grant of the relevant option. The Board of Directors may also provide restrictions on the exercise of a share option during the period a share option may be exercised.

The exercise price is determined by the Board of Directors of the Company, and shall not be less than the highest of: (i) the closing price of the Company’s shares on the date of grant; (ii) the average closing price of the Company’s shares for the five business days immediately preceding the date of grant.

The maximum number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company shall not, in aggregate, exceed 30% of the total number of shares in issue.


43

OTHER INFORMATION

The total number of shares issued and to be issued upon exercise of the options granted to each individual under the Share Option Scheme and any other share option schemes of the Company (including both exercised, cancelled and outstanding options) in any 12-month period shall not exceed 1% of the total number of shares in issue.

The fair value of share options granted to Eligible Participants is recognised as staff costs with a corresponding increase in share option reserve within equity. The fair value is measured at grant date using the Binomial model, taking into account the terms and conditions upon which the options were granted. Where the Eligible Participants have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest.

During the vesting period, the number of share options that is expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognised in prior years is charged/credited to the statement of profit or loss for the year of the review, unless the original staff costs qualify for recognition as an asset, with a corresponding adjustment to the share option reserve. On vesting date, the amount recognised as an expense is adjusted to reflect the actual number of options that vest (with a corresponding adjustment to the share option reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Company’s shares. The equity amount is recognised in the share option reserve until either the option is exercised (when it is included in the amount recognised in share capital for the shares issued) or the option expires (when it is released directly to accumulated profits).


44

OTHER INFORMATION

As at 1 January 2019, no option was granted under the Share Option Scheme. As at 30 June 2019, 109,750,000 options were granted and are outstanding under the Share Option Scheme. The total number of options available for grant is 254,713,704 (30 June 2018: 364,463,704), representing approximately 6.95% (30 June 2018: 9.95%) of the issued shares of the Company. Details of such interests and movements of share options granted by the Company under the Share Option Scheme are shown below:

Number of share options

Name or category of grantees

Date of grant

Exercise price (HK$) Exercise period

Balance at as

1 Jan 2019

Granted during the

period

Cancelled during the

period

Lapsed during the

period

Exercised during the

period

Balance as at 30 June

2019

Director:Mr. Zhang Bingnan 10/1/2019 2.520 10/1/2021–9/1/2023 — 379,500 — — — 379,500

10/1/2022–9/1/2024 — 379,500 — — — 379,50010/1/2023–9/1/2025 — 391,000 — — — 391,000

Mr. Han Qingtao 10/1/2019 2.520 10/1/2021–9/1/2023 — 379,500 — — — 379,50010/1/2022–9/1/2024 — 379,500 — — — 379,50010/1/2023–9/1/2025 — 391,000 — — — 391,000

Mr. Wang Xu 10/1/2019 2.520 10/1/2021–9/1/2023 — 379,500 — — — 379,50010/1/2022–9/1/2024 — 379,500 — — — 379,50010/1/2023–9/1/2025 — 391,000 — — — 391,000

Mr. Wang Jian 10/1/2019 2.520 10/1/2021–9/1/2023 — 379,500 — — — 379,50010/1/2022–9/1/2024 — 379,500 — — — 379,50010/1/2023–9/1/2025 — 391,000 — — — 391,000

Mr. Ye Liwen 10/1/2019 2.520 10/1/2021–9/1/2023 — 280,500 — — — 280,50010/1/2022–9/1/2024 — 280,500 — — — 280,50010/1/2023–9/1/2025 — 289,000 — — — 289,000

Mr. Zhu Weirong 10/1/2019 2.520 10/1/2021–9/1/2023 — 280,500 — — — 280,50010/1/2022–9/1/2024 — 280,500 — — — 280,50010/1/2023–9/1/2025 — 289,000 — — — 289,000

Sub-total 6,300,000 6,300,000

Employees:In aggregate 10/1/2019 2.520 10/1/2021–9/1/2023 — 34,138,500 — — — 34,138,500

10/1/2022–9/1/2024 — 34,138,500 — — — 34,138,50010/1/2023–9/1/2025 — 35,173,000 — — — 35,173,000

Sub-total 103,450,000 103,450,000

Total 109,750,000 109,750,000

The closing price of the shares of the Company immediately before the date of grant as quoted on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) was HK$2.49 per share.


45

OTHER INFORMATION

Fair value of share options and assumptionsThe fair value of services received in return for share options granted on 10 January 2019 is measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted is measured based on Binomial model. The contractual life of the share option is used as an input into this model. Expectations of early exercise are incorporated into the model.

Fair value of share options and assumptions are as follows:

Share price (HK$) 2.52 per share

Exercise price (HK$) 2.52 per share

Grant date 10 January 2019

Total number of share options granted 109,750,000

Number of share options granted to Directors* 4,000,000

Number of share options granted to employees 105,750,000

Share option period (years) 6

* Mr. Zhang Bingnan and Mr. Wang Jian were appointed as the Directors of the Company on 1 February 2019, and accordingly, they were classified as employees when the relevant share options were granted on 10 January 2019.

Share OptionsLot 1 Lot 2 Lot 3

First exercise date 10/1/2021 10/1/2022 10/1/2023Maturity date 9/1/2023 9/1/2024 9/1/2025Expected volatility (%) 40.631 40.657 39.160Dividend yield (%) 4.122 4.122 4.122Risk-free interest rate (%) 1.744 1.769 1.808Fair value (HK$) 22,679,000 24,365,000 25,268,000

Notes:

(i) The expected volatility is based on the historic volatility, which is calculated based on the weighted average remaining life of the share options and adjusted for any expected changes to future volatility based on publicly available information.

(ii) The expected dividend yield is based on the dividend payout in the previous year and the average share price in the preceding year.


46

OTHER INFORMATION

For the period ended 30 June 2019, total equity-settled share-based payment expenses recognised were as follows:

HK$’000

Total equity-settled share-based payment expenses 72,312Amortisation during the period (12,889)

At 30 June 2019 59,423

DIRECTORS’ INTERESTS IN SECURITIES AND COMPLIANCE WITH THE MODEL CODE SET OUT IN APPENDIX 10 TO THE LISTING RULESThe Company has adopted a code of conduct regarding Directors’ securities transactions on terms no less exacting than the required standard of the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the “Model Code”). Having made specific enquiry of all Directors, all Directors have confirmed that they have complied with the Model Code and the code of conduct regarding Directors’ securities transactions adopted by the Company for the six months ended 30 June 2019.

As at 30 June 2019, according to the register maintained by the Company pursuant to Section 352 of the Securities and Futures Ordinance (the “SFO”), or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code, the interests of the Directors in the shares and underlying shares of the Company were as follows:

Long positionOrdinary shares of the CompanyMr. Zhang Bingnan is holding 1,150,000 options to subscribe 1,150,000 (0.03%) shares of the Company.

Mr. Han Qingtao is holding 1,150,000 options to subscribe 1,150,000 (0.03%) shares of the Company.

Mr. Xue Ming is holding 1,020,000 (0.03%) shares of the Company.

Mr. Wang Xu is holding 1,150,000 options to subscribe 1,150,000 (0.03%) shares of the Company.

Mr. Wang Jian is holding 1,150,000 options to subscribe 1,150,000 (0.03%) shares of the Company.

Mr. Ye Liwen is holding 850,000 options to subscribe 850,000 (0.023%) shares of the Company.

Mr. Zhu Weirong is holding 850,000 options to subscribe 850,000 (0.023%) shares of the Company.

Mr. Choy Shu Kwan is holding 300,000 (0.01%) shares of the Company.

Miss Leung Sau Fan, Sylvia is holding 33,000 (0%) shares of the Company.


47

OTHER INFORMATION

Save as disclosed above, as at 30 June 2019, none of the Directors, chief executives or their associates had any personal, family, corporate or other interests and short positions in the securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which is required to be recorded in the register maintained under Section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code and none of the Directors, or their spouses or children under the age of 18, had any right to subscribe for the securities of the Company, or had exercised any such right during the period.

SUBSTANTIAL SHAREHOLDERSAs at 30 June 2019, according to the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO, the following shareholders had notified the Company of relevant interests in the issued shares of the Company:

Ordinary shares of the Company

Number of shares

Total number of

shares

Approximate percentage of

the issued share capital of the

CompanyName of shareholderBeneficial

owner

Held by controlled

corporation(s)

Long positionChina Poly Group Corporation

Limited* (中國保利集團有限公司)— 1,732,659,362

(Note 1)1,732,659,362 47.32%

Poly Southern Group Co., Ltd.* (保利南方集團有限公司)

253,788,246 1,478,871,116 (Note 2)

1,732,659,362 47.32%

Poly Developments and Holdings Group Co., Ltd.* (保利發展控股集團股份有限公司)

— 1,478,871,116 (Note 3)

1,478,871,116 40.39%

Poly (Hong Kong) Holdings Limited 112,410,476 1,366,460,640 1,478,871,116 (Note 4)

40.39%

Ting Shing Holdings Limited — 1,366,460,640 (Note 5)

1,366,460,640 37.32%

Congratulations Company Ltd. 1,037,975,080 — 1,037,975,080 28.35%

Source Holdings Limited 228,398,760 100,086,800 328,485,560 (Note 6)

8.97%


48

OTHER INFORMATION

Notes:

1. China Poly Group Corporation Limited* (中國保利集團有限公司) owns 50% and 100% of the issued share capital of Poly (Hong Kong) Holdings Limited and Poly Southern Group Co., Ltd.* (保利南方集團有限公司) (“Poly Southern Group”) respectively, and is accordingly deemed by the SFO to be interested in the shares directly and indirectly owned by Poly (Hong Kong) Holdings Limited and Poly Southern Group.

2. Poly Southern Group owns 37.93% of the issued share capital of Poly Developments and Holdings Group Co., Ltd.* (保利發展控股集團股份有限公司) (“Poly Developments and Holdings”), whose shares are listed on the Mainboard of the Shanghai Stock Exchange (SSE: 600048), as at 30 June 2019 and is accordingly deemed by the SFO to be interested in the shares indirectly owned by Poly Developments and Holdings.

3. Poly Developments and Holdings owns 50% of the issued share capital of Poly (Hong Kong) Holdings Limited and is accordingly deemed by the SFO to be interested in the shares directly and indirectly owned by Poly (Hong Kong) Holdings Limited.

4. Poly (Hong Kong) Holdings Limited is deemed by the SFO to be interested in 1,478,871,116 shares of the Company as a result of its direct holding of 112,410,476 shares and indirect holding of 1,366,460,640 shares through its wholly-owned subsidiary, Ting Shing Holdings Limited.

5. Ting Shing Holdings Limited is deemed by the SFO to be interested in 1,366,460,640 shares of the Company as a result of its indirect holding of 1,366,460,640 shares through its subsidiaries, Congratulations Company Ltd. and Source Holdings Limited of 1,037,975,080 shares and 328,485,560 shares, respectively.

6. Source Holdings Limited is deemed by the SFO to be interested in 328,485,560 shares of the Company as a result of its direct holding of 228,398,760 shares and indirect holding of 100,086,800 shares through its wholly-owned subsidiaries, Musical Insight Holdings Limited and Wincall Holding Limited, of 44,658,800 shares and 55,428,000 shares, respectively.

* for identification purposes only

Save as disclosed above, the Company has not been notified of any other relevant interests or short positions in the issued shares of the Company as at 30 June 2019.


49

OTHER INFORMATION

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIESDuring the six months period ended 30 June 2019, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

SPECIFIC PERFORMANCE OBLIGATIONS OF CONTROLLING SHAREHOLDERDisclosures pursuant to Rule 13.21 of the Listing Rules1. On 2 September 2016, a wholly-owned subsidiary of the Company, as borrower, and the Company,

as guarantor, entered into a facility agreement with certain banks for a total term loan facility of HK$1,900,000,000. The final maturity date of the facility will be the earlier of (a) the date falling 48 months after the date of the facility agreement and (b) the date falling 9 months after a certificate of compliance is issued by the Director of Buildings and Lands in respect of the development of Tuen Mun Town Lot No. 542, Castle Peak Road, Castle Peak Bay, Area 48, Tuen Mun, New Territories, Hong Kong.

Pursuant to the aforesaid facility agreement, the Company undertakes with the banks that, if, among other things, China Poly Group Corporation Limited (“China Poly Group”) (a) ceases to be the single largest shareholder of the Company; (b) ceases to maintain management control of the Company; or (c) ceases to be under the control of the State-owned Assets Supervision and Administration Commission of the State Council of the People’s Republic of China (“SASAC”), the loan together with accrued interest may become immediately due and payable.

2. On 23 May 2017, the Company (as the borrower) entered into a facility agreement with China CITIC Bank International Limited as facility agent (the “Facility Agent”) and certain other banks for a 36-month term loan facility of HK$3,900,000,000.

Pursuant to the above facility agreement, the Company undertakes with the banks that, if, among other things, China Poly Group (a) ceases to be the single largest shareholder of the Company or ceases to hold, directly or indirectly through its controlled corporations (as defined under Part XV of the Securities and Futures Ordinance (“SFO”)), at least 40% of the issued share capital of the Company; (b) ceases to maintain management control of the Company; or (c) ceases to be under the control and supervision of the SASAC, the Facility Agent may declare that all or part of the loan together with interest and any other amounts accrued thereunder be immediately due and payable.


50

OTHER INFORMATION

3. On 7 February 2018, a wholly-owned subsidiary of the Company, as borrower, entered into a facility agreement with Industrial and Commercial Bank of China (Macau) Limited as facility agent and security agent (the “Agent”) for a 24-month term loan facility of HK$4,000,000,000.

Pursuant to the above facility agreement, if, among other things, China Poly Group ceases to be the single largest shareholder of the Company or no longer maintains (directly or indirectly) beneficially not less than 30% of the issued share capital of the Company, the Agent may declare that all or part of the loan together with accrued interest and all other amounts accrued thereunder be immediately due and payable.

4. On 6 April 2018, a wholly-owned subsidiary of the Company (as the issuer), the Company (as the guarantor) and China Poly Group entered into a keepwell deed in relation to the US$500,000,000 5.2% notes due 2021 (the “Notes”).

Pursuant to the keepwell deed and the terms and conditions of the Notes, if China Poly Group (a) ceases to be the single largest shareholder of the Company or ceases to hold, directly or indirectly through its controlled corporations (as defined under Part XV of the SFO), at least 40% of the issued share capital of the Company; or (b) ceases to maintain management control of the Company, this will constitute an event of default under the Notes.

5. On 10 July 2018, the Company (as the borrower) entered into a facility agreement with China Everbright Bank Co., Ltd. Hong Kong Branch for a committed revolving facility of HK$1,000,000,000. The final maturity date of the revolving loan facility shall be the date falling 24 months from the date of this facility agreement.

Pursuant to the facility agreement, the Company undertakes with the bank that, if, among other things, China Poly Group (a) ceases to be the single largest shareholder of the Company; or (b) ceases to maintain effective management of the Company, the loan together with accrued interest may become immediately due and payable.

6. On 6 September 2018, the Company (as borrower) entered into a facility agreement with Industrial Bank Co., Ltd. Hong Kong Branch for a revolving loan facility of HK$2,000,000,000. The final maturity date of the loan will be the earlier of (a) the date falling 24 months after the date of the facility agreement and (b) the said bank’s prevailing annual review date.

Pursuant to the facility agreement, it shall be an event of default, among other things, China Poly Group (a) ceases to be the single largest shareholder of the Company or ceases to hold, directly or indirectly, through its controlled corporations (as defined under Part XV of the SFO), at least 40% of the issued share capital of the Company; (b) ceases to maintain management control of the Company; or (c) ceases to be under the control and supervision of the SASAC.

If an event of default under the above facility agreement occurs, the bank shall be entitled to (a) demand for immediate repayment together with interest and any other amounts accrued under the loan and (b) terminate or cancel all or any part of the loan.


51

OTHER INFORMATION

7. On 3 July 2019, the Company (as borrower) entered into a facility agreement with Chong Hing Bank Limited for a 12-month revolving term loan facility of HK$780,000,000. Pursuant to the facility agreement, it shall be an event of default, among other things, China Poly Group ceases to be the largest ultimate shareholder of the Company, Chong Hing Bank Limited may declare that all of part of the banking facility together with interest and any other amounts accrued thereunder be immediately due and payable.

8. On 30 July 2019, a 35% indirectly owned joint venture company (as the borrower) and the Company (as one of the guarantors) entered into a facility agreement with Industrial and Commercial Bank of China (Asia) Limited (the “ICBC Asia”) for a 12-month bridge term loan facility of HK$5,166,400,000. Pursuant to the terms and conditions of the facility agreement, the Company would provide ICBC Asia with the guarantee in proportion to its ultimate beneficial interest of 35% in that joint venture company.

Pursuant to the facility agreement, if, among other things, China Poly Group ceases to (a) be the single largest shareholder of the Company; (b) maintain control of the Company; or (c) be under control of the SASAC, the bank may declare that all or any part of the advances made by the bank under the facility agreement together with interest and any other amounts accrued thereunder be immediately due and payable.

9. On 9 September 2019, the Company, a 70% indirect non-wholly owned subsidiary of the Company, and the Industrial and Commercial Bank of China (Asia) Limited entered into a facility agreement for a term loan up to HK$2,900,000,000. The final maturity date shall be the earlier of (i) the date falling 60 months after the date of the facility agreement; and (ii) the date falling 9 months after the date of the certificate of compliance of the government grant concerned.

Pursuant to the facility agreement, if, among other things, China Poly Group ceases to be (a) be the single largest shareholder of the Company, (b) maintain management control of the Board of the Company, or (c) be under the control of the SASAC, the bank may declare that all or any part of the advance(s) made by the bank under the facility agreement together with interest and any other amounts accrued thereunder be immediately due and payable.


52

OTHER INFORMATION

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODEThroughout the period under review, the Company has complied with the code provisions as set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules (the “CG Code”), other than code provisions A.5.1 to A.5.4 of the CG Code. The reasons for deviation are explained below:

Code Provisions A.5.1 to A.5.4 of the CG Code — Nomination CommitteeUnder code provisions A.5.1 to A.5.4 of the CG Code, listed issuers should, among others, establish a nomination committee with specific written terms of reference. The Company has considered the merits of establishing a nomination committee but is of the view that it is in the best interests of the Company that the Board collectively reviews, deliberates on and approves the structure, size and composition of the Board and the appointment of any new Director. The Board is tasked with ensuring that it has a balanced composition of skills and experience appropriate for the requirements of the businesses of the Group and that appropriate individuals with the relevant expertise and leadership qualities are appointed to the Board to complement the capabilities of the existing Directors.

The Company considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are no less exacting than those in the CG Code.

CHANGE IN DIRECTORS’ INFORMATIONThere is no change in the Directors’ information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

AUDIT COMMITTEEThe audit committee of the Company (“the Audit Committee”) presently comprises four independent non-executive Directors, namely Miss Leung Sau Fan, Sylvia (as Chairlady), Mr. Ip Chun Chung, Robert, Mr. Choy Shu Kwan and Mr. Wong Ka Lun.

The members of the Audit Committee have reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal control, risk management and financial reporting matters including the review of the unaudited condensed consolidated financial statements of the Company for the six months ended 30 June 2019. The Audit Committee has approved the unaudited interim financial statements.

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